The following are common items that are treated differently for financial reporting purposes than they are for tax purposes:

The excess amount of a charge to the accounting records (allowance method) over a charge to the tax return (direct write-off method) for uncollectible receivables.

The excess amount of accrued pension expense over the amount paid.

The receipt of dividends from a taxable Canadian corporation that are treated as income for

the accounting purposes but are not subject to tax.

Expenses incurred in obtaining tax-exempt income.

A trademark that is acquired directly from the government and is capitalized and amortized

over subsequent periods for accounting purposes and expensed for tax purposes.

A prepaid advertising expense that is deferred fro the accounting purposes and deducted as

an expense for tax purposes.

Premiums paid on life insurance of officers (where the corporation is the beneficiary).

A penalty paid for filing a late tax return.

Proceeds of life insurance policies on lives of officers.

Restructuring costs that are recognized as an unusual item on the income statement and are

not deductible until actual costs are incurred.

Unrealized gains and losses that are recognized on investments recorded as FV-NI or FV-

OCI and are not taxable or deductible until realized for tax purposes.

Excess depletion for accounting purposes over the amount taken for the tax purposes.

The estimated gross profit on a long-term construction contract that is reported in the income

statement, with some of the gross profit being deferred for tax purposes.

Instructions

a) Indicate for each item above if the situations a permanent difference or a reversing difference

resulting in a temporary difference.

b) Indicate for each item above if the situation will usually create future taxable amounts

resulting in a deferred tax liability or future deductible amounts resulting in a deferred tax

asset, or whether it will have no future tax implications.

c) Provide your answer in a table as following. The answer of Part 1 is provided as an example:

	a)	b)
1.	Reversing difference	Future deductible amounts, deferred tax assets